Spot the Warning Signs

For many people, buying a new car is right up there with getting a root canal. It can be a painful process fraught with shady practices and dealer add-ons you never asked for.

While there are certainly honest auto dealers out there, not everyone is on the up-and-up. If you are in the market for a new vehicle or want to make sure you get the best deal possible when you are, consider these warning signs that you may be getting ripped off:

They Want To Know Your Target Monthly Payment

This seems like such a harmless request… And it might be if you were anywhere else but a place where you are being asked to plunk down a huge sum of money for something that will begin to lose value the moment you leave the lot. “Never answer that question,” says Ira Rheingold, executive director of the National Association of Consumer Advocates. “If you do, at that point, they've got you. Only negotiate the cost of the car. Period.” 

“That Car Is Sold, Here’s A Higher-Priced Model…” 

If you see a vehicle offered online at a dealership, call first to verify the car is going to be there when you come for a test drive. Variations of this bait-and-switch scam have been around for years. A seller gets one or two cars without the bells and whistles and advertises them at a rock-bottom price. Those models sell fast. When customers come in looking for that specific car, they are sometimes told “Oh, it just sold,” and then shown more expensive models.  

They Pressure You To Get An Extended Warranty

When it comes to extended warranties on new cars, not everyone thinks they are a smart investment. A Consumer Reports study found most people didn’t get the value they paid for in the extended warranty. “I can’t speak for everyone, but I personally don’t buy them,” Montoya says. “If you are getting a car known for reliability, it seems counter intuitive to get the extended warranty.” Plus, you’re not obligated to buy the extended warranty when you purchase the car. When you do that, you could end up paying interest on it if it’s rolled into the payments. He suggests saving up some money to buy the extended warranty later on, right before the regular warranty is set to expire.

They Want To Mix Financing And The Price Of The Car

The most important thing people need to recognize is that financing a car and negotiating a sales price for the car are two separate transactions, Rheingold says. It’s just like when you buy a house. First, you get approved for a mortgage and then you make an offer on a house. Because most people need financing for a new vehicle, you should secure that from a financial institution before you go to a dealership. Rheingold cautions consumers to only identify the total price they are willing to pay — the “out the door” price and “never, ever, ever mix the financing and the price of the car.” 

The best way to quietly tilt the odds back in your favor is to start with your financing — and start it somewhere that’s working for you, not the dealership. Credit unions, in particular, are often the unsung heroes of auto loans, consistently offering lower interest rates, fewer fees, and more flexible terms than traditional banks or dealer-arranged financing. Because they are member-owned, not profit-driven, their goal is to help you borrow smarter — not to squeeze extra margin out of your loan on the back end. Walking into the dealership with a pre-approval from a credit union doesn’t just save you money over time; it gives you leverage in the moment, turning you into a buyer with options rather than one at the mercy of whatever financing package is slid across the desk.

How To Buy A Car Like A Pro

Admittedly, the way most cars are sold in the U.S. is ridiculous, says Rheingold, the consumer advocate. “There should be a big supermarket of cars and the prices should be listed as opposed to the smartest, most sophisticated person getting the best deal.” To avoid being scammed, take these steps before purchasing a new vehicle:

  • Do your homework and research the price of the car online with a service such as Kelley Blue Book, at KBB.com.
  • Get your financing lined up by being pre-approved for a loan at your credit union.
  • Only negotiate the price of the car with the seller, not the financing
  • If you’re trading in a vehicle, know its value going in by using an online resource.
  • Never buy an extended warranty; wait until your new car’s regular warranty is about to expire before considering one.
  • If a dealer wants you to pay a higher price than the sticker price, walk away.

Find out how much vehicle you can afford in minutes by applying online or stopping by Cal Coast branch.